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Friday, September 7, 2012

MSNBC — The Twilight Zone

 By Eric Ross, Ph.D., MBA 

MSNBC broadcasts often look like the “Twilight Zone”, as the Sept — 7, 2012 “Morning Joe” demonstrated. “Joe Scarborough and friends” reaction to the decisively bleak August jobs report was an enthusiastic, triumphant cheer for the President’s alleged “job creation”, while the actual meaning of the report was the deepening crisis and more of the same  massive jobs destruction in America. In this regard it was a rather typical response of the US mainstay media. Dishonest, I must add. Giving the spin-meisters  something to do.

The Bureau of Labor Statistics announced in the morning of September 7, 2012 that only 96,000 jobs were created, far below economists’ consensus  expectation of 120,000 jobs. The BLS also revised downward its June and July numbers. The unemployment rate fell to 8.1 percent, which might sound good… if you cleverly ignore the context  — that this reduction  of unemployment rate came because people fell out of labor force in record numbers; it  “came primarily because the labor force participation rate fell to 63.5 percent, its worst level in more than 30 years,” according to CNBC.com.

CNBC noted that 368,000 people dropped out of the workforce in August, four (4) times more than the 96, 000  jobs "created", I must add, mostly low-paying jobs at that. CNSNews.com found that the number of people out of the labor force last month hit a record high of 88,921,000.

This job destruction orgy was actually cheered on MSNBC and other networks by self-appointed "pundits" as the President’s achievement in… “job creation.”  No sooner had Mika Brzezinski announced the unemployment rate than Joe Scarborough immediately proclaimed, “This is good news for the president,” before she could even spell out the meager 96,000 jobs gained. (SEE THE VIDEO).  Apparently, MSNBC commentators are so “unbiased” that they spin job destruction as "job creation." And no, this is not a matter of the glass half-full versus half-empty. One minus four is not a five.

For those folks who think a picture is worth a thousand words 
(although this article is just under 350 words)

With pathos in his voice, Joe Scarborough repeated the rate drop saying it had fallen from 8.3 percent to 8.1 percent, which sent the crowd, strategically assembled behind him, cheering. “What you call that is a tailwind,” he claimed over their deafening cheers. A few moments later the crowd started chanting “Four more years!” Scarborough thought out loud that it was "good political news" for the administration, even as his colleague Chuck Todd mused, “it’s not great news”, about the same numbers, calling the report “a mixed bag.”

Regarding the same BLS report, former Clinton Labor Secretary Robert Reich wrote honestly that “today’s jobs report provides a troubling reminder that the economy is still in bad shape.” He stated, "we have more jobs today than we did at the trough of the Great Recession in 2009. But the recovery has been anemic — and it appears to be slowing. We’re better off than we were then, but we’re not as well off as we need to be by a long shot." Note his use of the term "Great Recession".

The bottom line is that in terms of real unemployment (as opposed to the Government's gobbledygook definition of thereof), we are deep in the red, at the levels of permanent, structural unemployment not seen since the Great Depression (see U-6 below). The former Labor Secretary prefers to call the current state of affairs in the US Labor market the Great Recession. 

"If the labor force participation rate was the same as when Obama took office in January 2009, the unemployment rate would be 11.2%,” noted CNBC contributor and the American Enterprise Institute blogger James Pethokoukis.

Had the employment participation rate remained the same as the previous month, Pethokoukis pointed out, “the unemployment rate would be 8.4 percent” — higher than the 8.1 percent in the August report. In this respect the paradox is that this White House administration is taking credit for "lowering" unemployment by way of permanent job destruction.  The broader measure of unemployment, U-6 stood at 14.7 percent in August.

The easiest way to see what transpired since 2007 is to look at  the employment-population ratio.  It answers the question,  "What percentage  of  the working-age population is  employed?" 

This graph was built with the help of the graphing engine at the Economic Data Research website of the Federal Reserve Bank of St. Lewis; it shows a rather dismal picture of no job creation, since the job destruction in 2009.

For those readers, who like myself, would rather deal with real numbers, than political spin on them, here are two tables representing the unemployment statistics, U-3 and U-6, the data straight from the horse's mouth, the U.S. Bureau of Labor Statistics (BLS).  

The U-3 is the BLS-reported "official" unemployment rate, based only on new claims, which does not take into account those who ran out of unemployment benefits but still have not found any job, not even temporary or part-time.  

The U-3 Unemployment Rate (Source:  U.S. BLS data)

The U-6 unemployment rate, is a broader measure of unemployment, although it still does not show the full picture in all its ugliness. It counts not only people without work seeking full-time employment (the more familiar U-3 rate), but also those "marginally attached workers and those working part-time, who really want full-time work. Note that some of these part-time workers are counted as "employed" by U-3, but they could be working as little as an hour a week. And the "marginally attached workers" include those who have gotten discouraged and stopped looking, but still want to work. It does not count those who got discouraged and no longer want to work. The age included in this statistics is 16 years and older.
U-6 Unemployment Rate, a Broader Measure of Unemployment (SOURCE: U.S. BLS data)

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